Charter Hall Retail Reit · ASX:CQR
Charter Hall Retail Reit — H1 FY2023 Earnings Presentation
41 slides from Charter Hall Retail Reit's earnings presentation, Feb 16, 2023
Slide 1: Charter Hall Retail REIT Half Year Results
Charter Hall Charter Hall Retail REIT 2022 FullRetail REIT Year Results
Slide 2: Acknowledgement of Country
Acknowledgement of Country Charter Hall is proud to work with our customers and communities to invest in, develop and manage properties on land across Australia. We pay our respects to the Traditional Owners, their Elders past, present and emerging and recognise their continuing culture and contribu
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 - CQR Executive Director Charter Charter Hall Hall Retail Retail REIT REIT 2023 2023 Half
Slide 4: Highlights and Strategy
Charter CharterHall HallRetail RetailREIT REIT 1 Highlights and Strategy Secret Harbour Square, WA 2023 2023Half HalfYear YearResults Results
Slide 5: Portfolio Highlights
Highlights and Strategy Portfolio Highlights Key metrics 1H FY22 1H FY23 Movement Operating earnings per unit Distributions per unit Operating earnings $82.1m1 14.35 cents 13.00 cents $83.4m +1.6% 0.9% from 1H FY221 11.1% from 1H FY22 Operating earnings per unit 14.22 cents 14.35 cents +0.9% Dis
Slide 6: CQR Convenience Strategy
Highlights and Strategy CQR Convenience Strategy Providing a resilient and The leading owner growing income stream for our investors from of convenience retail property convenience shopping centre and long WALE retail KEY DRIVERS Enhance Active asset Prudent capital portfolio quality management mana
Slide 7: Delivering on Strategy
Highlights and Strategy Delivering on Strategy Active portfolio curation towards higher quality and higher growth assets Convenience shopping centre retail Convenience long WALE retail Asset management - $511m of acquisitions since 2017 have targeted - $786m invested into NNN convenience long WALE -
Slide 8: Delivering on Convenience Strategy
Highlights and Strategy Delivering on Convenience Strategy Active portfolio curation driving major tenant income growth FY17 / 18 FY22 / 23 4% of major tenant rent reviews CPI based and 0% NNN leases 36% of major tenant rent reviews CPI based and 32% NNN leases 1 1.2% 2.6% Major tenant Major tenant
Slide 9: Delivering on Strategy
Highlights and Strategy Delivering on Strategy Off-market acquisitions of quality convenience long WALE retail portfolios Unlevered IRRs from convenience long WALE retail portfolios since acquisition 38.9% Capital - Expansion of convenience focus through establishing partnerships with new major tena
Slide 10: ESG Leadership
Highlights and Strategy ESG Leadership CQR top quintile performer in the global GRESB rating Achievements in 1H FY23 Focus areas in FY23+ Environment Net Zero Carbon by 2025 More than 21MW of installed solar and 4.9 Star NABERS Energy for Retail Scope 3 emissions Scope 1 and Scope 21 6.75MWh of inst
Slide 11: Financial Performance
Charter CharterHall HallRetail RetailREIT REIT 2 Rosebud Plaza, Vic Financial Performance 2023 2023Half HalfYear YearResults Results
Slide 12: Earnings and Distributions
Financial Performance Earnings Look-through basis $m 1H FY22 1H FY23 % change and Distributions Net property income from convenience shopping centre retail 91.5 95.0 3.8% - Total net property income growth of 6.9% Net property income from convenience long WALE retail 18.2 22.3 22.5% - Same property
Slide 13: Balance Sheet
Financial Performance Balance Sheet Look-through basis $m Jun 22 Dec 22 Convenience shopping centre retail investment properties2 3,339 3,385 Convenience long WALE retail investment properties 960 1,058 - Total property portfolio value increased by $144m over 1H FY23 due to: Cash 29 29 - valuation m
Slide 14: Property Valuations
Financial Performance Property Valuations Convenience Convenience $m shopping centre long WALE Total portfolio retail retail - 100% of the portfolio was externally revalued at June 2022 portfolio value 3,339 960 4,299 31 December 20221 Net acquisitions (1) 26 25 - Portfolio valuation growth of 2.8%
Slide 15: Capital Management
Financial Performance Capital Management Key metrics Jun 22 Dec 22 - Available liquidity of $126m Weighted average cost of debt1 2.7% 3.1% - Forecast FY23 weighted average cost of debt of 3.2%1 assuming average Weighted average debt maturity 3.9 years 4.1 years BBSY for 2H FY23 of 3.5%2 and existing
Slide 16: Operational Performance
Charter CharterHall HallRetail RetailREIT REIT 3 Pacific Square, NSW Operational Performance 2023 2023Half HalfYear YearResults Results
Slide 17: Portfolio Summary
Operational Performance Portfolio Summary – Convenience shopping centre retail occupancy improved from 98.5% to 98.6% Portfolio snapshot Jun 22 Dec 22 – 4.7% total MAT growth1,2 Number of convenience shopping centre retail assets 51 51 Number of convenience long WALE retail assets 521 589 – Portfoli
Slide 18: Portfolio Tenant Customer Composition
Operational Performance Portfolio Tenant Customer Top 10 tenant customer groups1 Composition 15.6% - Major tenants Woolworths, Coles, bp, Wesfarmers2, Aldi, Ampol and Gull represent 12.7% 56% of portfolio income - Following the off-market acquisitions, Ampol 12.3% and Gull are now the 5th and 8th la
Slide 19: Convenience Long WALE Retail Portfolio
Operational Performance Convenience Long WALE Retail Portfolio Portfolios Value $’m Cap rate WALE yrs Rent review – Convenience long WALE retail represents 24% of total portfolio by value and 18% of total portfolio bp Australia 547 4.5% 16.9 CPI income bp New Zealand 185 4.5% 18.0 CPI (0.5%-4%) – 16
Slide 20: Supermarket Anchors
Operational Performance Supermarket Anchors – Supermarkets continued to demonstrate resilience with 3.3% MAT growth1 Supermarket performance Jun 22 Dec 22 – Supermarkets in turnover have experienced stronger 4.0% MAT growth1 MAT growth1 3.2% 3.3% – Direct to boot facilities operating at 95% of the C
Slide 21: Specialty Tenants
Operational Performance Specialty Tenants – 194 specialty leases completed in the period Specialty performance Jun 22 Dec 22 – Leasing spreads over the period were +3.0% MAT growth1 (3.7%) 8.1% – 82 new leases (+0.0% leasing spread) Sales productivity (per sqm) $9,894 $10,259 – 112 renewals (+3.7% l
Slide 22: Outlook and Guidance
Charter CharterHall HallRetail RetailREIT REIT 4 Z Energy, Wellington, NZ Outlook and Guidance 2023 2023Half HalfYear YearResults Results
Slide 23: Outlook and Guidance Reaffirmed
Outlook and Guidance Outlook and Guidance Reaffirmed – Strategy remains consistent and focused on non-discretionary convenience retailers, providing income growth and resilience – Portfolio curation and active asset management with an increased focus on convenience long WALE retail will continue to
Slide 24: Annexures
Charter CharterHall HallRetail RetailREIT REIT 5 Rockdale Plaza, NSW Annexures 2023 2023Half HalfYear YearResults Results
Slide 25: Annexures
Annexures Annexures 01 07 FY23 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 Convenience shopping centre
Slide 26: FY23 guidance
Annexures Annexure 1 FY23 guidance (cpu) 1.1 (0.8) 0.3 (1.1) 1.1 (0.2) (0.1) (2.9) 28.4 28.7 25.8 FY22 Convenience Convenience Net convenience Finance costs Finance Other Impact of FY23 Capital FY23 EPU shopping long WALE long WALE relating to net costs expenses DRP EPU expenditure DPU centre retail
Slide 27: Reconciliation of statutory profit to operating earnings and AFFO
Annexures Annexure 2 Reconciliation of statutory profit to operating earnings and AFFO $m 1H FY23 cpu 1H FY22 1H FY23 Operating earnings 14.22 14.35 Statutory profit 124.8 Less: COVID-19 tenant support2 (1.20) – Less: capital expenditure (1.32) (1.35) Revaluation increment on investment properties1
Slide 28: NTA per unit reconciliation
Annexures Annexure 3 NTA per unit reconciliation ($) (0.03) 0.13 (0.13) (0.01) 0.14 5.01 4.91 June 2022 Operating Valuation Derivative Distribution Other 1 December 2022 NTA earnings movements movements NTA 1. Includes accounting adjustments Charter Hall Retail REIT 2023 Half Year Results 28
Slide 29: Investment in property joint ventures
Annexures Annexure 4 Investment in property joint ventures – operating earnings and balance sheet breakdown 1H FY23 Convenience Convenience bp Ampol Z Energy Gull $m CQR RP1 RP2 RP6 Other shopping CDC3 long WALE Total portfolios portfolios portfolio1 portfolio2 centre retail retail Ownership interes
Slide 30: Investment in property joint ventures (continued)
Annexures Annexure 4 continued Investment in property joint ventures – operating earnings and balance sheet breakdown 1H FY22 and June 2022 Convenience Convenience bp Ampol Z Energy Gull $m CQR RP1 RP2 RP6 Other shopping CDC long WALE Total portfolios portfolios1 portfolio portfolio centre retail re
Slide 31: Debt maturities and covenants as at December 2022
Annexures Annexure 5 Debt maturities and covenants as at 31 December 2022 Limit Drawn ICR ICR LVR LVR Debt facility (ownership interest) Maturity ($m) ($m) Covenant Actual Covenant Actual CQR bank debt facilities 100 Mar-26 200 Jul-26 130 Jul-26 50 Jul-26 95 Nov-26 75 Nov-26 100 Dec-26 75 Jul-27 Tot
Slide 32: Convenience focused shopping centre portfolio
Annexures Annexure 6 Convenience focused shopping centre portfolio 27 Convenience assets Convenience Convenience – Single supermarket and complementary convenience specialty compared Plus compared to neighbourhood1 to sub-regional1 – Specialty productivity across the convenience portfolio outperform
Slide 33: Lease expiry profile as at December 2022
Annexures Annexure 7 Lease expiry profile as at 31 December 2022 Major tenant expiry profile (by income) 80% 66.5% 10.8 years 60% Major tenant WALE 40% 7.3 years 20% 9.4% Portfolio WALE 3.4% 6.3% 5.4% 7.1% 0.0% 0.2% 1.6% 0% 3.4 years FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31+ Specialty and mini-m
Slide 34: Property valuations as at December 2022
Annexures Annexure 8 Property valuations as at 31 December 2022 State Property Location Ownership interest (%) Book Value ($m) Cap Rate ACT Dickson Woolworths Dickson 100.0% 26.8 4.50% Manuka Terrace Manuka 100.0% 62.0 5.75% ACT Total 88.8 NSW Bass Hill Plaza Bass Hill 20.0% 28.6 5.00% Bateau Bay Sq
Slide 35: Property valuations as at December 2022 (continued)
Annexures Annexure 8 continued Property valuations as at 31 December 2022 State Property Location Ownership interest (%) Book Value ($m) Cap Rate NSW continued Rutherford Marketplace Rutherford 50.0% 26.5 5.00% Salamander Bay Square Salamander Bay 50.5% 96.4 5.75% 1 Singleton Square Singleton 100.0%
Slide 36: Property valuations as at December 2022 (continued)
Annexures Annexure 8 continued Property valuations as at 31 December 2022 State Property Location Ownership interest (%) Book Value ($m) Cap Rate Vic Campbellfield Plaza Campbellfield 100.0% 103.0 5.00% Gateway Plaza Leopold 50.0% 85.8 5.50% Lansell Square Kangaroo Flat 100.0% 113.0 5.88% Rosebud Pl
Slide 37: Property valuations as at December 2022 (continued)
Annexures Annexure 8 continued Property valuations as at 31 December 2022 State Property Location Ownership interest (%) Book Value ($m) Cap Rate bp Australia portfolio Australia 23.3% 546.6 4.47% bp New Zealand portfolio New Zealand 24.5% 184.6 4.47% Ampol I portfolio Australia 2.5% 46.2 4.44% Ampo
Slide 38: Portfolio MAT by state and category as at December 22
Annexures Annexure 9 Portfolio MAT by state and category as at 31 December 2022 Specialty sales Proportion of MAT growth1 Sales by category MAT growth1 by state specialty sales New South Wales & ACT 56% 9.5% Supermarket 3.3% Western Australia 13% 0.6% DDS 12.1% Victoria 10% 13.6% Majors 4.6% South A
Slide 39: Convenience shopping centre retail portfolio historical performance
Annexures Annexure 10 Convenience shopping centre retail portfolio historical performance Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Dec 22 Number of properties 66 58 58 58 55 51 50 50 51 51 51 Occupancy 97.8% 98.1% 98.1% 98.1% 98.1% 97.3% 97.8% 98.3% 98.4% 98.5% 98.6% 5 5
Slide 40: Glossary
Annexures Annexure 11 Glossary 1H FY22 JV 6 months from 1 July 2021 to 31 December 2021 Joint venture 1H FY23 MAT 6 months from 1 July 2022 to 31 December 2022 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 41: Further information
Further information Investor Relations Tel 1300 365 585 (within Australia) +61 2 8651 9000 (outside Australia) Email reits@charterhall.com.au Presentation authorised by the Board charterhall.com.au/cqr IMPORTANT NOTICE & DISCLAIMER This presentation ("Presentation") has been prepared by and is the s
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