Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — FY2012 Earnings Presentation
42 slides from Charter Hall Retail Reit's earnings presentation, 2012
Slide 1: Charter Hall Retail REIT 2012 Full Year Results
Charter Hall Retail REIT 2012 Full Year Results
Slide 2: Important Notice
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 general information pur
Slide 3: Presenters and agenda
Scott Dundas John Courtney Philip Schretzmeyer Fund Manager Head of Asset General Manager Management (Retail) Finance 1 Full Year Results 2 Portfolio Investments 3 Australian Operational Performance 4 Financial Performance 5 Strategy and Outlook 3
Slide 4: Full Year Results
Charter Hall r Retail REIT
Slide 5: Financial results – year ended June 2012
Full Year Results Financial results – year ended 30 June 2012 Earnings Balance Sheet Statutory profit: $9.7m; 3.24 cpu Net tangible assets: $1,013m; $3.38 pu Operating earnings1: $86.3m; 28.81 cpu Portfolio valuation: $1,978m; 8.31% cap rate Distribution: $78.3m; 26.10 cpu REIT balance s
Slide 6: FY12 Highlights
FY12 Highlights Growing Australian Acquired four properties for $160m1 at average initial yield of 8.5% business Five wholly owned US properties sold during the year realising majority of remaining equity in the United States portfolio Australian portfolio represents 91% of the REIT‟s net tang
Slide 7: Geographic Analysis
Geographic Analysis 30 JUNE 2012 AUSTRALIA POLAND GERMANY OTHER1 TOTAL NTA (A$m) 917 48 12 36 1,013 NTA per unit ($) 3.06 0.16 0.04 0.12 3.38 Proportion of total NTA 91% 5% 1% 3% 100% Balance sheet gearing 32.8% 69.6% 87.5% 18.4% 40.4% Property portfolio Number of properties 74 5 2 10 91 Gross letta
Slide 8: Portfolio Investments
Charter Hall @ Retail REIT — a —THE COFFEE cup _
Slide 9: Revaluations
Revaluations AUSTRALIA SIX MONTHS TO JUNE 2012 FREESTANDERS NEIGHBOURHOOD SUB-REGIONAL HOUSEHOLD OFFSHORE TOTAL RETAIL PORTFOLIO Number of properties 19 41 12 2 17 91 June 2012 valuation (A$m) 182.3 853.6 447.6 71.3 422.7 1,977.5 Prior book value1 (A$m) 186.2 852.5 447.3 77.2 420.7 1,983.9 Movement
Slide 10: European Strategy
European Strategy Poland Strategy to exit Polish market has been accelerated with assets to be marketed for sale Market conditions considered opportune to recycle equity from Poland into Australian assets Germany Stable German property (Jena) to be marketed for sale Redevelopment of Chemnitz
Slide 11: Other Non-core Disposals
Other Non-core Disposals Review of Australian portfolio continuing for further selective capital recycling Remaining four US wholly owned and four joint venture assets are being actively marketed or under contract New Zealand assets under contract for sale, pending the purchaser obtaining insu
Slide 12: Australian Acquisitions
Australian Acquisitions 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 - $80 million Financial metrics: Five year unlevered IRR: 10%+; Avera
Slide 13: Australian Operational Performance
03 Australian Operational Performance
Slide 14: Australian Portfolio
Australian Portfolio Sub-regional Neighbourhood Freestanding Wanneroo Central, WA Household retail 14
Slide 15: Australian Portfolio Summary
Australian Portfolio Summary Recent acquisitions have improved overall portfolio quality Occupancy and income growth remain strong Specialty rental rate growth of 4.9%: — 3.7% on 131 new leases — 5.9% on 110 renewals Arrears over 60 days low at 0.3% of annual base rent Albany Plaza, WA SUMMA
Slide 16: Australian Portfolio: Anchor tenants
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% Full year sales at Jun-12 = A$26.2bn Woolworths Woolworths Ltd, 29% 7% 6% Coles Wesfarmers, 23% (includes Coles, Kmart, Targ
Slide 17: Australian Portfolio: Specialty tenants
Australian Portfolio Specialty tenants SUMMARY BY % OF ABR OCCUPANCY SALES Specialty occupancy cost of 8.5% CATEGORY COST1 GROWTH1 Average specialty gross rent $689/sqm Services 8% 12.1% 7.3% Sales productivity over $8,100/sqm Food catering 6% 10.3% 2.7% Pharmacy 5% 6.8% 4.8% Weighted average
Slide 18: Australian Portfolio: Projects underway
Australian Portfolio Projects underway PROJECT VALUE YEAR ONE FORECAST ($M) YIELD COMPLETION Jerrabomberra, NSW 2.0 11.0% Dec-12 Allenstown, Qld 16.5 9.3% Apr-13 Murwillumbah, NSW 3.2 10.1% May-13 Singleton, NSW 59.1 8.6% Jun-13 Total 80.8 8.9% Singleton Redevelopment, NSW 18
Slide 19: Financial Performance
Charter Hall r Retail REIT —
Slide 20: Earnings
Earnings A$M FY12 FY11 Operating EPU growth of 3% driven by: — Strong Australian NOI growth Statutory profit 9.7 62.2 — Reweighting to Australia Unrealised property valuation losses 21.2 26.8 Unrealised loss / (gain) on derivatives 28.8 (15.6) — Debt initiatives Transfer of cumulative FX losses fr
Slide 21: Balance Sheet
Balance Sheet AUSTRALIA POLAND GERMANY OTHER JUNE 2012 JUNE 2011 A$m A$m A$m A$m A$m A$m Total assets1 1,486 246 110 46 1,888 1,891 Total debt1 (487) (171) (96) (9) (763) (739) Other liabilities (82) (27) (2) (1) (112) (82) Net assets 917 48 12 36 1,013 1,070 Units on issue (millions) 300 302 NTA pe
Slide 22: Debt Maturity Profile
Debt Maturity Profile No FY13 debt maturities Refinanced or restructured over $750 million of debt facilities in FY12 FY12 weighted average interest cost 6.3% with FY13 cost forecast to reduce further Full compliance with all financial covenants globally Debt Maturity Profile at 30 June 2012
Slide 23: Strategy and Outlook
Charter Hall r Retail REIT
Slide 24: Australian Retail Sector
Australian Retail Sector Supermarket anchored shopping centres Retail sales growth Retail property yields 10% 12% 8% 10% 6% 8% 6% 4% 4% 2% 2% 0% 0% -2% -4% Total Retail Supermarkets Clothing & Department Stores Regional Sub-regional Neighbourhood Bulky Goods 10-yr Bond — Resilience of supermarket an
Slide 25: Strategy
Strategy Maintain and enhance the REIT‟s non-discretionary defensive Australian portfolio through focus on: — Enhancing property returns via vertically integrated Charter Hall management platform — Proactive equity and debt management Complete reweighting to Australia: — Marketing of Polish port
Slide 26: FY13 Outlook
FY13 Outlook Charter Hall Retail REIT is well positioned with the majority of its portfolio consisting of high quality resilient Australian neighbourhood and sub-regional shopping centres FY13 operating earnings barring unforseen events is forecast to be 29.5 – 30.0 cents per unit1 Distribution pa
Slide 27: Questions
Charter Hall vS Retail REIT Questions
Slide 28: Annexures
Annexures 1 Detailed Earnings Slide 29 2 NTA Reconciliation Slide 30 3 Debt & Covenants Slide 31-32 4 Hedging Profile Slide 33-34 5 Capital Expenditure & Development Pipeline Slide 35-36 6 Non-Core Offshore Portfolio Slide 37 7 Portfolio Detail Slide 38-39 8 Glossary Slide 41 28
Slide 29: Detailed Earnings
Annexure 1 Detailed Earnings ALL VALUES IN A$M JUN 2012 JUN 2012 JUN 2012 JUN 2011 STATUTORY UNREALISED AND OPERATING OPERATING Share of profits from investment in JV’s PROFIT OTHER ITEMS EARNINGS EARNINGS Net property income 18.1 (0.5) 17.6 19.1 Property valuation gains 2.6 (2.6) - - Management fee
Slide 30: NTA Reconciliation
Annexure 2 NTA Reconciliation +0.14 (0.08) (0.04) $3.06 AUSTRALIA $3.04 NTA at 30 June 2011 Offshore disposals and Interest rate swap MtM Unrealised property NTA at 30 June 2012 reweighting to Australia movements valuation losses and other OFFSHORE $0.50 (0.14) (0.02) (0.02) $0.32 NTA at 30 June 201
Slide 31: Debt Maturities
Annexure 3 Debt Maturities 30 JUNE 2012 REGION LIMIT DRAWN DRAWN RATE MATURITY (ALL VALUES CQR SHARE) (NATURAL M’S) (NATURAL M’S) (A$M) Total FY13 - AUS JV debt – Lake Macquarie & Nunawading AUS 32.0 32.0 32.0 Floating Nov-13 Total FY14 32.0 Poland EUR 128.6 128.6 159.0 Floating Jul-14 Germany EUR 8
Slide 32: Covenants
Annexure 3 Covenants 30 JUNE 2012 FINANCIAL LIMIT DRAWN UNUSED MATURITY COVENANT ACTUAL (ALL VALUES CQR SHARE) COVENANTS Australia A$m A$m A$m Security pool gearing 60.0% 52.4% Multi-Currency Facility 335.0 288.7 46.3 Oct-16 Security pool ICR 1.85x 2.51x Gearing1 65.0% 43.3% ISDA ICR 1.85x 2.55x AUS
Slide 33: Income Hedging & Cross Currency Swap
Annexure 4 Income Hedging & Cross Currency Swap INCOME HEDGING FY13 FY14 FY15 Avg. proportion income hedged USD 100% 100% 50% Avg. FX forward rate (0.76) USD 0.76 0.76 0.76 Avg. proportion income hedged EUR 15% 13% 3% Avg. FX forward rate (0.55) EUR 0.55 0.54 0.54 US$ DEBT CROSS CURRENCY SWAP FY13 F
Slide 34: Interest Rate Risk Management
Annexure 4 Interest Rate Risk Management Australia (Total debt - A$617.4m) FY13 FY14 FY15 FY16 Average hedged debt 74% 71% 71% 58% 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$42.4m) FY13 FY14 FY15 FY16 Average fixed d
Slide 35: Capital Expenditure
Annexure 5 Capital Expenditure REGION (A$M, CQR SHARE) MAINTENANCE LEASE INCENTIVES TOTAL MAINTENANCE DEVELOPMENT AND INCENTIVES Australia FY12 4.6 2.1 6.7 20.5 FY11 5.2 1.1 6.3 8.7 FY10 2.5 0.8 3.3 11.5 New Zealand FY12 - - - - FY11 0.1 - 0.1 - FY10 0.1 - 0.1 0.2 United States FY12 0.0 0.2 0.2 - FY
Slide 36: Development Pipeline
Annexure 5 Development Pipeline FY12 FY13 FY14 FY15 Wanniassa, $20.8m Mackay, $15.2m Caboolture, $13.3m Lansell Plaza, $31.6m Mount Hutton, $9.0m Carnarvon, $1.0m Carnes Hill, $4.7m Moree, $0.5m South Hedland, $15.3m Rockhampton, $16.5m Mareeba, $1.5m Narromine, $0.8m Murwillumbah, $3.2m Singleton,
Slide 37: United States and New Zealand
Annexure 6 United States and New Zealand TOTAL NEW ALL VALUES REPRESENT CQR SHARE WHOLLY OWNED – US REGENCY JV – US TOTAL US ZEALAND Number of properties 4 4 8 2 10 CQR ownership 100% 75% n/a 50% n/a Book values (m‟s) US$25.6 US$46.0 US$71.6 NZ$8.2 n/a Net equity (A$m) 16.8 13.0 29.8 6.6 36.4 Lake M
Slide 38: Portfolio Summary
Annexure 7 Portfolio Summary DECEMBER AUSTRALIA POLAND GERMANY OTHER JUNE 2012 2011 Number of properties 74 5 2 10 91 90 Number of tenancies 1,597 350 94 124 2,165 2,155 Valuation (A$m) 1,554.8 237.4 109.0 76.3 1,977.5 1,904.3 Performance metrics Same property NOI growth1 3.5% (2.7%) (0.4%) 7.3% 2.3
Slide 39: Australia – Anchor Tenant Lease Expiry
Annexure 7 Australia – Anchor Tenant Lease Expiry % Base Rent Expiring 62.1% 40% 35% 30% 25% 20% 15% 8.0% 10% 7.6% 6.1% 6.6% 5% 3.6% 3.2% 1.8% 1.0% 0% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Lake Macquarie FY21+ Fair, NSW Excludes properties under redevelopment 39
Slide 40: Australia – Specialty Tenant Lease Expiry
Annexure 7 Australia – Specialty Tenant Lease Expiry % Base Rent Expiring 40% 35% 30% 25% 17.2% 20% 17.8% 15.2% 17.1% 14.3% 15% 10% 7.8% 5.5% 5% 3.8% 1.3% 0% Lake Macquarie Fair, NSW FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21+ Excludes properties under redevelopment 40
Slide 41: Glossary
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 sum of actual gross re
Slide 42: Further information
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 www.charterhall.com.au/cqr
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